Hawaiian Electric's Profit Surges on Wildfire Settlement Remeasurement
A $101 million non-cash gain from remeasuring wildfire liabilities lifted HEI's consolidated net income to $123 million in the second quarter, masking a 37% decline in core earnings.
Hawaiian Electric Industries (HE) reported second-quarter 2026 consolidated GAAP net income of $123 million, or $0.71 a share, up sharply from $26 million, or $0.15 a share, a year earlier. The surge was driven almost entirely by a non-cash gain from remeasuring the company's wildfire settlement liability to present value, a one-time accounting adjustment that obscured deteriorating performance in the utility's underlying operations.
The Honolulu-based utility holding company recorded a $154 million pre-tax benefit after reducing the wildfire settlement liability from $1.44 billion to $1.30 billion, partially offset by $18 million in accretion expense. Stripping out wildfire-related items and costs tied to Pacific Current's strategic review, HEI's core net income fell to $22 million, or $0.13 a share, from $35 million, or $0.20 a share, in the year-ago quarter — a 37% decline. Core earnings also slipped sequentially, continuing a slide from $0.24 a share in the fourth quarter of 2025 and $0.18 in the first quarter of 2026.
At the Hawaiian Electric utility, the pattern was similar. GAAP net income rose to $138 million from $39 million a year ago, but core net income declined to $33 million from $42 million, dragged down by interest expense that more than doubled to $45 million and a $9 million increase in operations and maintenance costs. The interest burden reflected both the accretion on the remeasured settlement liability and higher debt costs, while O&M rose on increased generation, transmission, distribution, labor and general-administrative expenses. Utility core net income has now declined for four consecutive quarters, falling from $42 million in the fourth quarter of 2025 to $33 million in the latest period.
Revenue at the electric utility climbed 26% year over year to $937 million, though the gain was largely a pass-through of higher fuel costs. Average fuel oil prices jumped 45% to $145.67 a barrel, pushing fuel oil expense up 60% to $337 million, while purchased power costs also rose. Kilowatthour sales edged down 0.8%, with Maui Electric posting a 2.6% decline. The utility's GAAP return on equity surged to 15.0% on a trailing 12-month basis, but its core ROE slipped to 5.7% from 7.2% a year earlier.
The holding-company segment widened its net loss to $15 million from $13 million, with the core loss expanding to $10 million from $7 million, primarily because interest income fell after the first wildfire settlement payment in April. A maximum penalty of roughly $3.7 million is expected under the Fuel Cost Risk Sharing mechanism, recorded as a reduction of fuel revenue.
HEI did not issue new full-year guidance but reiterated its expectation that 2026 adjusted O&M, excluding pension, will significantly outpace inflation, due to higher insurance premiums, storm response costs, vegetation management, overhauls, IT spending and labor. The company also recognized $9 million in insurance recoveries as an adjustment to tort-related legal claims, a line item absent from the year-ago quarter.
The results underscore the tension facing Hawaiian Electric as it works through the financial aftermath of the 2023 Maui wildfires. While the settlement remeasurement bolstered headline earnings and lifted the utility's GAAP return on equity, the company's core operating metrics continued to erode under the weight of rising costs and flat-to-declining sales volumes — trends that have now persisted for four straight quarters.